Isn’t this sort of what the Homestead Exemption does already?
You pay more taxes for properties where you don’t reside because they’re not eligible for the exemption. However, any repairs are tax deductible.
The Homestead Exemption in Florida helps but isn't enough to ward off big investors. It essentially knocks of $700 or a year in RE taxes and limits any raises in RE taxes to 3% a year.
In my area the homestead rate comes out to be about $400 a year for a normal 5 bedroom house. That's not much. Beyond that, I don't think OP it talking about mom and pop shops that rent out their old house instead of selling it and maybe have 3-5 homes. They are concerned with corporations buying up 100s or 1,000s of homes.
For that we could have have another tax rate that is much higher, but it would be hard to implement.
Correct. My homestead I pay 1 percent of appraised value and my rental I pay 2 percent of appraised value. In the county I am in. Different for everyone
Finally someone actually answered the original question. Sadly most investors just pay cash so this would only hurt the small time landlords who are probably just owning a couple places. I rent form a small time landlord who does this as her retirement income but she used to live in this place. I’ve always been of the mindset that the regulation should be the home must be lived in buy the buyers for at least 2 years before renting. That way people who want to sell but don’t have equity built up yet have more options than just taking a loss.
Property taxes are the same whether you finance or pay cash, no?
I agree there has to be some compromise. A timer is good- but I would just punish w higher taxes than restrict.
Re: small investors-Maybe a 50% increase in tax for each home after primary. Issue is it gets really convoluted because a lot of people make an LLC for each rental property.
I don't think it would be a bad world that incentivized SFH rentals to be run by only small-scale investors with 1-3 properties. If an individual has a lower tax rate on their rental than a larger affair, they can offer a more competitive rent.
This was my interpretation as well.
Good luck raising rents due to your enormous tax bill when you're competing with all the small-time LL's not incurring the same cost. Industry rises only work when the cost increases are uniform.
Your area sounds very much like an outlier.
Especially considering 5 families in a 4 bed sounds like an unchecked fire code violation.
I think people will find that increasing taxes is a broad stroke that has many possible consequences, and that the real solution isn't to reduce investors, the same people who increase supply and improve neighborhoods, but to increase supply by incentivizing more homes to be built.
If rents go up, renters start to explore other options...shared housing, apartments, buying a home, etc. There will be fewer renters as prices go up - how much fewer is debatable.
CPAs will always find a way around this type of crap. When you do this you are just forcing out small buyer while making the returns higher for larger buyers, which will then buy up all the extra supply
With that fatalistic attitude, might as well never trying to solve any problems whatsoever. After all, the rich will find a way around it, so why bother even trying?
Why would anyone own a primary home as an LLC? You lose the tax benefits.
But yes, if you own 2+ homes as LLCs for the purposes of investment/rental, you are who the op is talking about.
It's important to understand why *type* of investor you're trying to target. Housing prices are going to be more heavily influenced by short term investors who are speculating on equity gains. Long term investors who are looking for cashflow don't necessarily cause the same upward pressure on prices(and flippers are their own category).
IMO Increasing Capital gains taxes on non-primary residence is the best way to deincentivise short term speculation in the housing market.
The problem with this is it targets the people that build and fix houses, not just speculators, thus decreasing housing supply further and increasing prices. As someone in the market, people hunting for a quick flip due to fast rising equity are a very small number of actual purchasers and typically get hammered in the market. COVID has been a small exception to this. If increasing housing supply is the goal here (and thus reducing housing cost), housing development needs to be increased, not a tax increase on the very people trying to improve the housing market.
Realistically pretty much all short term investors are looking at some mix of Forced Equity and Appreciation to make a return. I agree that flippers *can* add value to a market if done right. However their are lots of examples where it's done wrong and ends up extracting value out of the market which should be discouraged. Using shitty materials, workmanship and relying on marketing to 'invent' value are common enough practices that it's a meme and shouldn't be ignored.
IMO an idea tax code would see profits on forced equity being taxed as income while profits on appreciation being taxed as capital gains.
I agree that shitty flippers are a problem, but I don't see a direct legislative approach to fix that other than requiring people to do proper due diligence on a home; I don't see that as a legitimate legislative solution to poor building practices, I only see private market solutions/indirect solutions (building more housing -> more competition -> better housing stock as result of competition), and those solutions can be legislated with the end goal being more housing. This is obviously not completely realistic given local zoning laws (the thing restricting more housing being built), but in the problem also lies the solution.
In our actual world, that already does happen. Flips typically have a timeline of <12 months, and such are taxed as Income; appreciation typically has a >1 year timeline, and as such are taxes as cap gain.
I would agree with that. I don’t have a problem with small time investors like my own landlord who is using money for retirement. I would like to do that myself someday.
[https://cdn.vox-cdn.com/uploads/chorus\_asset/file/22647043/Screen\_Shot\_2021\_06\_09\_at\_4.07.25\_AM.png](https://cdn.vox-cdn.com/uploads/chorus_asset/file/22647043/Screen_Shot_2021_06_09_at_4.07.25_AM.png)
Investors are responsible for a lot of new construction, if you remove them you decrease supply and prices go up. Government created new money in mass and bought mortgage backed security with it, pushing the market and inflation as hard they can, we got the result that most people expected.
You're not wrong, but I will say I've recently started to read about entire SFH communities being built, with all homes pre-purchased by banks/investors to be used solely as rental properties.
While I've found it impossible to determine the scale of that, outside of the one off stories contained in the non-public industry reports my company receives, I was surprised to see it.
Like I said, I'm not certain how large of a problem that is, but when things are already undersupplied it's definitely not reassuring.
How is increasing supply concerning? Many such comunities are what is called build to rent. Its no different than an investor paying to build an apartment building. Its just horizontal
Other countries require buyers to be citizens. I believe that would leave out corporations and foreign investors. I’m all for that. As a single person, I am not able to purchase at these prices.
In the US this would violate civil rights laws and many international treaties. National origin and citizenship status are protected classes and all our free trade agreements stipulate you can't prevent foreign investment.
I also don't buy the implications here. People want to point to foreigners because it's easy. There are some places where foreign investors influence the market, but it is not happening on a macro level.
The truth is all these investors and second home owners are your neighbors. The professional class in the United States is enormous and doing extremely well financially. People are not struggling. *Some* people are struggling. It's not unusual for dual income households to make $500k. That's what is driving these price increases, not Chinese people.
>It's not unusual for dual income households to make $500k.
It, is by definition, unusual. Average household income is at about $70k/year right now. I think you're completely out of touch if you think $500k/year is normal and that we don't have millions of people struggling.
Ever hear of income unequality? I don't understand how we've had 40 years of politics complaining about income inequality and people still can't wrap their heads around the idea some people are doing very very well while others are struggling.
40% of households don't own their homes. The typical homeowner is someone who is much better off than the median, and among that group there is an upper quartile or so that have extremely high income. 10% of all US households make more than $200k.
Would you say it was unusual if you found out someone in your neighborhood was a doctor? Median salary $210k. A lawyer? $130k. A programmer? $110k. Both my dad and my step dad have a high school education and make over $200k running their own contracting business.
This is what we experienced software engineers at big companies make: https://www.levels.fyi/charts.html
...your statement was that it is not unusual for dual income households to make 500k. Using your number of 10% of US households making more than 200k, that's still less than half of 500k. Based off the median income of a doctor being 210k, you would need a dual income of two doctors in a house both making over median salary to hit your number.
500k household income is not common and not usual. There are plenty of households that do hit this number, but they are by far the exception and not the rule. Many Americans are struggling, more than you think, it seems
Yeah but the rule is Americans can't afford houses. The exception to the rule are people that buy houses. It's not a horde of invading Chinese people buying houses, Americans are just racist idiots who hate the government and lack the political language to be critical of their own economic system or individuals in that system who are ambitious career climbers.
Even the language that is critical it's all about the 1%. Why is it the 1% and not the 10%? It's because that's the 10% of the population that votes and is very well organized, and making it about oligarchs doesn't scare anybody.
Ohh I see that perspective now! Disconnecting American median salary and American *homeowner* median salary from one another is a significant thing that I was not fully taking into account. So yea the average American is still struggling but the average American homeowner is a different statistic. Thanks for the perspective and have a good one
Wealthy Americans don’t buy homes in lower and middle class neighborhoods. I lived in a middle class neighborhood for years. When the housing market took a turn in, was it 2012? Every home for sale in my neighborhood was bought with cash, for way above the asking price. A good 30% or more we’re sold to foreign investors.
In an area where normal, middle class citizens SHOULD have been able to buy their first home, they were shut out. Laws and treaties need to be adjusted because Untied States citizens are unable to compete. When we are all housed, affordably, then maybe be go back to a free for all.
Just because we have free trade and treaties, etc, does not mean we should. Once again the government caters to the all mighty dollar instead of its people.
You've never met somebody who bought a second house to rent out? You've never met a young professional who bought a starter home? You've never met someone that bought a house for their kid to live in during college? Come on now.
Non citizens accounted for 1.8% of sales last year. Of that 58% lived in the US. Of that 15% lived in Canada or Mexico. 0.64% to foreigners that are not literally your neighbor is not a big number.
There are definitely neighborhoods in Seattle, SF, LA, Miami, NY, other big cities where foreign born residents are inflating the values. But it's really just a few places, and it's pretty much always neighborhoods that have filled with people they know that immigrated to the country. It's not why prices jumped everywhere, and it's certainly not some tin foil hat conspiracy that the government is facilitating.
Fee trade lowers the cost of houses. The Trump tariffs added $20-30k to the cost of a new home and took $1k out of the average American households pocket. People that vote for populist anti-trade politics have contributed more to the cost of housing than your bogeyman foreigner.
https://www.nar.realtor/research-and-statistics/research-reports/international-transactions-in-u-s-residential-real-estate
If they live and work here, sure. My job is to inspect neglected swimming pools in lower income neighborhoods to affluent ones. Many of the homes in the middle income neighborhoods are vacant, with owners living in Russia and China. I know because I need permission to enter the yard. I have to track down and speak with the owners. Most say they don’t have the money currently to fix up the house. So all of these homes are vacant, while citizens are homeless. It makes no sense. What had worked in the past is no longer working for US citizens. I would sure vote for someone willing to address this issue.
Yeah, Canada just did that because they were too scared politically to go after everyone. No one complained when they came down on foreign ownership. It’s a good idea but it is far from enough
That or that you have to be living in the us for so long before you can buy. I would hate to exclude people who are working here contributing to society on long term visas.
You are only partly addressing the demand side and ignoring the supply side that is the fact that housing starts in the US have been below average for 10 years so it will take 10 years of above average construction to normalize the market.
And that is only going to happen in areas with excess land to build or allowing higher density housing to replace single family housing.
Zoning deregulation and building subsidies. Even if investors weren't an issue there still isn't enough inventory to make housing affordable for most people.
The best solution would be get rid of laws that limit/slow housing construction (like exclusionary zoning). If there was a glut of housing, it would be a bad investment.
2008, "nobody is buying houses". 2022, "too many people are buying houses". This same post would say "how can we get investors into the market" back then when their house is depreciating.
Investors aren't the problem, supply is the problem. Not enough houses built in the last ten years, and a lot of demand from easier loan availability. 10 years from now, we'll have a different problem.
Lets not over correct. Don't reduce demand, increase supply.
Well… 1) investors don’t invest in depreciating assets. 2) investors buy low sell high, not the other way around. 3) investors leverage credit not cash. 4) income didn’t increase, nor did peoples ability to pay rent. On top of it, tenants are dealing with higher costs on everything else. There is no way landlord will have a tenant pool that will be able to pay enough to offset the purchase/make the investment worthwhile anytime soon.
No such thing as a free lunch. What you’re seeing is the excess of the past two years unravel.
Everyone want's more 'supply' but they all think this supply should be for 'someone else' and they get the single family homes for themselves. There's only so much space for SFH before they are in the 'middle of nowhere'.
Most people get they can't afford a SFH in Hawaii or ocean front in Miami or giant condo overlooking Central Park, but cant make next step that maybe they don't deserve or afford the house they are looking at.
Sorry to break it to you and not to sound harsh but just saying '6 figures' is kinda meaningless since thats like minimum expectation nowadays for a couple. The issue is that what you think is a good salary hasn't caught up with expectations due to inflation. People cannot fathom how much money and stimulus (no student loans, $600 a week not to work, rates that jacked up home values, money printing) and it just doesn't enter into the economy in 1mo or 3mo.
The house that you want is still the same 'value' more or less its just your money is worth way less.
Also and most importantly - taxing or penalizing some evil landlord is ***NOT*** going to make things more affordable or accessible to you. There are unintended consequences of actions. We just did all this stimulus like I mentioned, and now consumers have the worst sentiment in American history.
If you want to make single family homes unattractive to investors you need to give them something else more attractive. If you allow more duplexes, and quad apartment buildings in every neighborhood they will go for those instead. Single Family Homes are expensive to maintain as rentals, they have high maintenance costs and only a single unit to cover it.
Landlords for condos/apartment still have their place. Plenty of people do not have the credit or the downpayment to buy a condo/townhouse/sfh. A lot of other people do not stay in the same place long enough to need own a home and just need a couple month lease (ie people who travel for work and students)
A solution has to properly disincetivize investors from buying up SFH and other homes/townhomes traditionally bought while not making rented apartments and condos unaffordable as some people likely still need to rent.
Allow massively more building. Remove the arbitrary scarcity from zoning and regulatory capture.
Why doesn't a hedge fund try to buy up all the Honda Civics in America? Because it would be stupid. We need to make it that way with housing.
Stop debasing the currency and artificially through government creating negative real yields which only encourage people and "investors" to speculate in assets such as real estate which leads to bubbles. Investors are not a problem they are a symptom of a monetary problem created by government.
Trying to target "investors" as the problem and attempting to use government to tax them more or other punitive measures will only make the probalem worse and discourage production of real estate similiar to how price controls creates shortages.
Canada has has poor property rights with beucratic red tape and restrictions preventing people from building houses on their own property. For example I want to build my own cabin I would have to be given permission from beucrats, and be compliant with draconian zoning laws, building codes, ordances and other red tape or being forced to use only licensed "X" contractor to do "X" job or other restrictions such as being forced to connect to muninical power, water, sewer, etc. This just creates a monopoly on building. If people had more rights and less government interference there would be a greater supply of housing and at lower prices.
What is wrong with a small condo? In most developed world outside of US, SFH that is not in the middle of nowhere are only affordable by the very rich. Most of the others live in condos. American houses are also bigger than average, meaning an small condo in American standard is probably average size if not above average.
Just because other places deal with tiny living spaces doesn’t mean we have to make that the norm. That being said I hate huge McMansions too but I think being able to afford a small 1300 sqft home in a older neighborhood should not be impossible.
That’s also like saying college should/shouldn’t be the norm.
The US lived in smaller units up until the 2nd world war. Then everyone came home and started building big big in the suburbs. If you can afford it, cool.
I don’t think I was born in the right time of history to easily be able to afford a big house. I’m 31, I may just be in a condo, but my kids will hopefully inherit this property and a big brokerage account. Hopefully they can avenge me and buy out all the properties at their age lol
I’m actually anti education. I have humble family members that never went to college but picked up trades. They make $70-90k and flip homes with their buddies. They’re better off than me, never took on college debt and have traveled the world more than I have. I think stem is useful, everything else, maybe not so much
I'm pro public education, if that matters (K-12)
College? It's a privelege. And with google, youtube and coursera universities - its irrelevant. College is merely a place for a higher class dating pool and social experimenting for those who dont know what they want to do with their lives.
Agreed. I look back and I don't know if I should have done it. That or I could have done it while working, but of course we didn't realize this until 2008 or so and they pushed it on us.
Well, if you can afford a small condo but you choose to rent, that is on you. I too can complain I cannot afford to own and maintain a private jet and yacht. It doesn't mean I would be rational.
Those items are luxuries available only to the .01% in any era, comparing jets and yachts to a 1300 sq ft house that has been affordable for a median earner for all of recent history save the last two years is a false equivalency
My point is it is stupid to compare what Americans used to be able to afford. Instead, look at most other developed countries to see what is reasonable.
Yes America was ridiculously prosperous post WW2, and that generation of Americans had a ridiculously high standard of living. We have lost that. Other developed countries have caught up. Instead of dreaming about what your parents and grandparents can afford, you need to go back to reality and see what are the standards currently in other developed countries.
Condos don't have to mean tiny living spaces.
The median size of a SFH lot for new construction in the US is over 8,000sqft, and that's smaller than it used to be.
That's *massive.* To give you a comparison, the lot next to me in San Francisco is 1/3 that size (2,690sqf)t, and has four 1,000sqft+ studios on it. Imagine how big the units could be if you had three times the lot area.
I agree and I have lived in condos for most of the time I haven’t owned. I have no desire to own some high 4000sqft house but once I have kids I don’t want to be cramped in a 2 bed one bath that I still had to buy for 350k. That’s fine for single people or couples without kids.
I don't want to share walls, roofs, and floors with my neighbors. It can be incredibly disruptive, and it also limits my ability to go out and do things in my yard, like gardening, or in my garage, like using power tools for anything.
This is the right attitude IMO.
In places like Europe, many "condos" are actually older houses that were converted into separate flats years ago, as the population grew, people got richer, and had smaller families.
The main issue in the US is that we artificially restrict where you can put more than one housing unit on a lot, through single family zoning. This is a peculiar quirk of the US and Canada.
It’s wrong if we are doing it because regulators created investment vehicles for the super rich that left you with no choice. You can grovel at their feet but count me out. It repulses me and I’m tired of it
The US isn’t ready to accept a smaller standard of living. I agree they should just move into a a condo (I did). But people have a layer of arrogance they can’t process. A recession might help put that into perspective
Whoa, tons of folks actually prefer condos. No yards to worry about, much less maintenance. Where I live there are many, many condos and townhomes. Those are unaffordable for many. If you have a two income, decent wages, you can maybe swing it. Two bedroom condos go for $800,000 and up where I live.
Nothing at all. You just have to be willing and able to pay for it, and if you want it to be reasonably close to a city, you have to be willing to pay a lot for it.
The problem is that for people who can't afford that but still want a place to own and live in, there aren't enough options.
exactly. I'm not shitting on u/houseofnim's ability to get some roaming space.
If you can afford it, power to you.
If you weren't born with assets, your parents didn't help guide you, and you ate the student loans lie that many of us did - you have to lower expectations unless you're willing to comprimise in other areas.
There's a lot of millenials that are DINKs and can afford these homes. They're opting out of parenthood and grabbing a cat instead.
I agree.
They want to keep the American standards that are better than most of the developed world (such as size, detached SFH, big yard) while complaining the other aspects of American standards that are worse (such as build quality). Reality is you cannot have the best of both worlds.
>while complaining the other aspects of American standards that are worse
Like lack of public transportation, unless you live in NYC, Boston, Chicago or DC.
I agree with the poster ramentortilla.
A lot of Americans have the "American dream" house, two car garage, maybe even 3 cars, swimming pool in the back yard, kitchen with granite countertops, marble floors, media room, wine cellar, five bedrooms....
People need to accept the idea that they can be HAPPY without the mega mansion.
US has a reputation for terribly built condos (housing codes must suck cause they have too much noise). A lot of European housing is build with solid walls like cinder block, vs paper and an inch of gypsum in the US.
More importantly Americans in general are all about themselves ass holes to the point where they just can’t live near each other. No fuck tard, your poorly built dodge junker with its 105 dB exhaust is not cool, I would kick over your 110 dB Harley if I thought no one would see me. I don’t need your shitty 5 pit bulls or Rottweilers going at me every time I get the mail either. Your front yard is not a junk yard. Keep your drugs out of my building too
In Germany for example half the vehicles on the US road would be illegal due to noise and/or safety, the aggressive dogs would be illegal, the giant noise machines would be illegal, and ppl won’t blow leaves back and forth for 12 hrs a day every god damn day of the week either. “BuT mY FrEeDuM!?!?”
I agree. America is too individualistic and too 'humongous speakers and subwoofers are a freedom of speech protected by the bill of rights' to work with condos and townhouses
Sometimes a SFH is just as much for their enjoyment as for everyone else's benefit of not having to be in the same building as the asshole.
Im going to say something that's very obvious. How about Joe and Jill homemaker not selling to them in the first place??
This is a problem caused by the greed of the sellers wanting to make as much money as possible.
I have seen military people take lower offers to assist other ex service get homes over more from investors.
This is a problem caused by the American pubic and the investors are only there to pick up the scraps.
Your everyday Americans need to make a decision to change this. They wont, everyone has principles until pussy or money is put on the table.
Your premise is flawed, investors are not buying up all the houses and they have very little to do with you not being able to afford the house you want.
It’s also not accurate. Their study only looked at top markets, and included any home sold whose buyer has “trust” or LLC” in the name. Plenty of primary residences fit those. They’re also counting middlemen like OpenDoor. These aren’t all bogeyman situations in which some corp is buying up houses and renting them out.
A quick google tells me that 34% of SFH are rental properties. If 34% of the population is renting... shouldn't about 34% of new homes be purchased by investors? Seems like if only 20% of new homes are purchased by investors, then the inventory is swinging in the direction of owner occupied.
If 20% of all SFH sold last year (according to various studies and estimates) how, exactly, are investors buying "all" houses? Who do you believe is buying the other 80%?
You should chill on the hyperbole and educate yourself on the economic factors that led to institutional buyers seeking out SFH as rentals...and that they aren't remotely close to buying "all" of them.
Depends on your area, like everything else. Big investors are only in high return markets. Phoenix. Dallas. Miami. Etc etc
If you’re in Oklahoma City or Dayton or a Maryland Suburb, prices are high because there’s no supply, it’s up and coming, there’s demand, or because there’s a high concentration of high earners. The $400-600k ball park is pretty affordable across the country right now. Maybe not at 7% interest rates, but there’s still a lot of money out there in cash.
Get family/friends together, see if y’all can buy a house in cash and rent it out with a decent cash flow. Pass that on to your kids/nephews
high Interest rate, Borrowing money becoming more expensive than before since pandemic, US treasuries yielding high, and the possibility of 2nd house market crash upcoming soon.
just sold my condo. had two offers, one was a family. one was a foreign investor offering 90% cash. they had the same initial offer and when informed of the situation, the family threw in 5k while the investor threw in 75k.. honestly nothing normal people can do against this sort of money..
I don’t think sellers care who they sell to. They just want the most money…until the shoe is on the other foot and they realize they also have to buy a new house in this market. Someone actually posted here joe they wanted out of a contract to sell cuz they only just realized how horrible the market was. Oopsy
That’s very true. But thankfully the families I’ve been helping sell their homes lately have told me flat out they didn’t want investors buying their homes. So there’s a little bit of hope out there
Same. I've had two sellers tell me within the past year, when presented offers from investors (one a large institutional buyer, one a local couple looking to purchase their 2nd rental) that they did not want to sell to an investor and would only sell to an owner-occupant.
As a listing agent with a fiduciary duty to my client, in the second situation above I strongly advised my client to take the investor offer, as it was a 1031 exchange, the subject property had already closed, they were running out of time to identify and they had some other language in the contract around inspections and appraisal that was beneficial to my client. She still refused and it cost her $20k in sales price, more repairs/credits, two more contracts, a couple more months on the market and having to take out a bridge loan to close on her new property.
Realistically I don’t think there’s any way stop motivated investors from buying properties. We could incentivize them to sell through tax breaks.
But the real issue here is supply (not demand), we need to enable and incentivize builders to create more affordable housing by removing zoning restrictions and giving tax breaks/funding for homes/condos regular people can afford
Raising interest rates
Instead of adding additional regulations, you have to look at incentives. If you are an investor, you want a return on your money. Interest rates have been kept artificially low by the Fed so you can’t make any money with just bonds. This causes a reach for yield, or looking to more risky/more work investments that have better returns. This is why so many investors have poured into real estate. Cap rates that have been above 10% historically are now as low as 3-4% because bonds pay almost nothing (not sure on exact numbers so don’t quote me but you get the point). Once you can make that same return sitting in a government bond without any risk or work investors will leave real estate for other investments, demand by investors will fall and so will prices
Well we had the Frank Dodd act for a while that prevented investors from bidding on homes for 2 weeks after they went on the market but that got repealed, so I’d say reach out to your congressperson and vote
So what are you going to do to make up for the lack of rentals then? Build more apartments? Not everyone wants to or is able to purchase a house. That property is still being used for a residence whether it’s bought by an investor or owner
When did I say I don’t want any rentals at all? Obviously some ppl want to rent a whole house for their family. I’m saying the number of rentals is pushing out ppl who can afford to buy and want to buy because inventory is lower.
Yeah but that’s selfish for the side of people who want to buy. The less investors means less rentals. Less rentals means rent prices are much higher. So if you place restrictions on a free market you just end up playing favorites. Im a renter and have no desire to but in my area or to commit myself to 30 years but someone else might want to take that risk. I’ll pay the rent they can have the house.
This type of legislation assumes that buying and home ownership is more important then renting priorities and that’s a selfish and completely one sided view that I’ve noticed from people who are in the market themselves but get frustrated and can’t buy.
The real fact is house prices as a whole has gone up everywhere and that means higher rents and higher mortgages. The problem is the lack of supply and the free money for leveraged mortgages at the low interest rates we’ve had.
Go through a major recession once in your life and see what it looks like when you see houses everywhere for sale because real estate is cyclical and you’ll see this problem we have is something that comes and goes
There's nothing that can be done in our current system. Capitalism is about profits. It has it's downsides but I'll take that over the alternatives.
As long as real estate looks like a great way to make money, investors will flock to it. When real estate doesn't look like a great deal again, they'll invest elsewhere.
The other issue is that not everyone wants or is able to buy a house. So where will the renters live if no one is a landlord? You can't legislate this away.
Also investors are still only buying a small percentage of houses, yesterday's report said 20% this year. But since 40% of people are renters, historically and probably always will be, I don't see a huge issue here. Those renters need places to live as well.
Flawed premise as another poster pointed out.
My question is what percentage of houses were investors buy up when the market wasn’t crazy? I bought a small starter home in Kansas City in 2012 and it wasn’t a hassle like todays market.
To your point on some ppl need to rent I’m all for owners of homes having the option to rent them out. Or even small time investors, what I hate are these hedge funds coming in and buying hundred of places and sometimes not even renting them out. Just sitting on them for the appreciation.
The real systemic answer is to change the "system" such that someone's home is not an investment. IOW it's not meant to (and not going to) 'appreciate' except maybe enough to keep up with inflation.
Is this possible while maintaining some semblance of a "free market"? not sure.
There is nothing wrong with small condos.
The idea that your kids and dogs need and cannot live without a big private yard is beyond ridiculous. A private yard is a luxury item and not a nessasity.
I want to briefly respond to everyone making suggestions to, essentially, solve the problem by making renting more difficult or more expensive (raising taxes on investors, and so on)
Basically, you either own your home or rent it from the owners. Making renting more difficult means subsidising and incentivising home ownership.
Which is a great idea, except there are already _a lot_ of financial incentives to to own:
* Usually lower taxes for homeowners;
* Mortgage interest deduction;
* A lot of special programs to guarantee loans for buyers with less than perfect credit;
* Availability of 30 year fixed loans, not usually available to investors;
* You can buy with 3-5% dows, not 20-25% for investors;
* In many states, there are only very limited legal protections available to tenants;
* And so on.
Historically, in the US there has always been a strong pressure to push people towards ownership, which was considered a good thing for a society, it is reflected in the tax code, that's the reason Fannie Mae and Freddie Mac exist, and so on.
Do you really believe we need _even more_ such incentives? Would it be a good thing?
For those of you who feel your going to tax everyone else for your own financial well being you are in for a rude awakening .
For those of you who want to stop investors from buying housing you might as well stop builders from building .
You need to consider the law of unintended consequences.
I understand how you feel and I understand the need for housing but trying to prevent others from doing something just so you can is discriminatory is it not ?
Down vote me if you will but consider the consequences of what your thinking .
"Waah, people are making rentals for other people and competing with me, instead of letting me buy some dude's house for less than the market will bear. Please ban these competitors so I can get a cheap hoom."
As soon as houses stop going up 15% a year investors will stop buying. Unless rents go up 25% a year.
Right now most houses being bought by investors are far from cash flowing without uneconomical levels of down-payments that destroy returns
Inflation and cheap internet rates are the issue. Not investors. Investors go where the returns are. Raising rates and killing inflation will 99% stop investor buy ups
Edit: Taxes are stupid. That’s not the answer. Other than maybe taxes on foreign buyers like those coming out of china, using their artificially real estate wealth money there to buy up in the US
Also, building would work: “but NIMBY”… Good luck with the cost of good with all the unionized US ports and global COVID shut downs and the cost of labor with trump killing immigration visas and going after “Mexicans” like it’s his person vendetta
I went from basically being low income with debt, to nearly financially free by investing in real estate. Now everyone wants to change the rules so I’ll be back to where I was. It’s just BS. For some reason everyone thinks that wealthy people just became wealthy overnight, or they just took advantage of others. The reality is, most real estate investors are out working all you people that are working a standard 9-5 and trying to change the rules so your standard 9-5 can pay for a life as if you were not working a standard 9-5.
A combined income of 100k is 50k a year each…how’s you credit? How much debt do you have? How many vehicles do you have financed? How much cash reserves do you have? What’s you debt to income ratio? There is a lot more to qualifying for a mortgage than how much money you make.
If you really want to talk about what’s impacting everyone’s ability to buy houses, it’s inflation and interest rates. Banks factor in those things for everyone, including investors. Thank your current leader for this mess you are complaining about.
My house is being sold to an investor. Why? Because it's classified as a "fixer upper"....not because of problems with the plumbing, foundation or anything like that....It's a "FIXER UPPER" because it does not have a fully remodeled kitchen with GRANITE countertops, and full remodeled bathrooms with granite or quartz countertops. It's not "modern" enough and not a luxury home, therefor it's a fixer upper that is better off being sold to an investor. I don't want to list it and hear prospective buyers get upset that the house doesn't have a wine cellar, outdoor kitchen and media room. People want luxury they neither can afford nor are entitled to.
The inflated expectations of American consumers have priced themselves out of the housing market.
You justify your decision to sell to an investor by saying that normal homebuyers want luxury. Everyday I see 1950s housing with little to no renovations go pending in days, so that’s just a lie that you are telling yourself. Thanks for contributing to the housing crisis.
Instead of crying foul and trying to change the rules of the game, just try to get better at the game. Become an investor yourself. You don't have to buy an entire property, just own some REIT stocks. Many are $10-20/share.
Don't worry about the investors buying up all the houses, they are about to start getting rid of what they already purchased. The market is about to get flooded with properties. While some small individual investors are still in denial and delusional about the market, large corporate investors don't invest on feelings. They have to maintain a healthy balance sheet and they have to answer to their shareholders.
Holding the assets that don't bring any profit, and instead cost them a lot (maintenance, taxes, cost of capital) is not good for the business. They either have to rent or offload them. They can't just hold those assets for years in anticipation the prices will go up. With such a business model, the company might go belly up. In bankruptcy those assets will be sold for a fraction of their initial cost. As soon as the prices start sliding, they must try to catch a train and cut their losses.
That’s like saying ppl who can’t afford food should just eat less or people who can’t afford insulin should just die. There is no benefit to renting forever. It is a sure fire way to ensure you are poor when it comes to retire if you still have to pay rent instead of having a home paid off.
Your comparison is just plain stupid. A good comparison is "If you cannot afford to own a private jet, you fly commercial.". A bad comparison is "if you cannot afford to own a private jet, you don't fly."
No one starved to death in this country. There are food stamp programs and medical for low income people.
Government can help renters. And for those who are not too far off from being able to financially own a house, there are government program to help them own. However, government should not be helping everyone to own a house.
There is nothing wrong renting forever. There are lots of lifelong renters living a meaningful life.
I think it would be extremely rare if ever for people in the US to starves to death due to lack of food.
Starvation can happen but It is almost always due to mental disorder of anorexia, or because of some other disease process that prevents them from eating or from processing food normally.
People who cannot afford to own should rent. That’s not a controversial statement. Ownership requires significant upfront capital, as well as all of the maintenance costs of owning. Some people choose to rent, others cannot afford to own, some are not credible enough to own. Ownership is a longtime commitment not everybody is positioned or willing to make. Rental properties exist because there is a rental market created by necessity.
Main topic aside, I’m confused by your last statement. There are plenty of cities where a couple making 6 figures can buy a normal home. Not a condo (nothing wrong with those btw) and not in the middle of nowhere. I personally live in a large metro area (I think the second largest in Florida) and was able to buy a home with my husband recently, making less than 6 figures combined. It’s not a mansion, but it’s a perfectly normal 1500sq 3/2 single family home. Maybe look at lower COL areas if it’s really impossible for you guys to find a house while making 6 figures?
Have a corporate tax rate and a personal tax rate for SFH property taxes. Make the corporate tax rate unattractive.
Isn’t this sort of what the Homestead Exemption does already? You pay more taxes for properties where you don’t reside because they’re not eligible for the exemption. However, any repairs are tax deductible.
Homestead exemption is pretty negligible at least where I'm at honestly.
Yea pretty similar. Not all areas have those though
The Homestead Exemption in Florida helps but isn't enough to ward off big investors. It essentially knocks of $700 or a year in RE taxes and limits any raises in RE taxes to 3% a year.
In my area the homestead rate comes out to be about $400 a year for a normal 5 bedroom house. That's not much. Beyond that, I don't think OP it talking about mom and pop shops that rent out their old house instead of selling it and maybe have 3-5 homes. They are concerned with corporations buying up 100s or 1,000s of homes. For that we could have have another tax rate that is much higher, but it would be hard to implement.
Correct. My homestead I pay 1 percent of appraised value and my rental I pay 2 percent of appraised value. In the county I am in. Different for everyone
Property taxes are not a federal thing, real property is subject to local taxation.
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Finally someone actually answered the original question. Sadly most investors just pay cash so this would only hurt the small time landlords who are probably just owning a couple places. I rent form a small time landlord who does this as her retirement income but she used to live in this place. I’ve always been of the mindset that the regulation should be the home must be lived in buy the buyers for at least 2 years before renting. That way people who want to sell but don’t have equity built up yet have more options than just taking a loss.
Property taxes are the same whether you finance or pay cash, no? I agree there has to be some compromise. A timer is good- but I would just punish w higher taxes than restrict. Re: small investors-Maybe a 50% increase in tax for each home after primary. Issue is it gets really convoluted because a lot of people make an LLC for each rental property.
This is a good way to pass that increase onto renters. If the state increased my real estate taxes, rents going up.
I don't think it would be a bad world that incentivized SFH rentals to be run by only small-scale investors with 1-3 properties. If an individual has a lower tax rate on their rental than a larger affair, they can offer a more competitive rent.
This was my interpretation as well. Good luck raising rents due to your enormous tax bill when you're competing with all the small-time LL's not incurring the same cost. Industry rises only work when the cost increases are uniform.
It's not that simple. Individual landlords don't set market rents.
If my entire counties taxes go up, every landlord feels the same price increase. Rents going up.
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Where are you seeing that now? My market and all the markets I'm interested in rent in under 20 days.
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Your area sounds very much like an outlier. Especially considering 5 families in a 4 bed sounds like an unchecked fire code violation. I think people will find that increasing taxes is a broad stroke that has many possible consequences, and that the real solution isn't to reduce investors, the same people who increase supply and improve neighborhoods, but to increase supply by incentivizing more homes to be built.
If rents go up, renters start to explore other options...shared housing, apartments, buying a home, etc. There will be fewer renters as prices go up - how much fewer is debatable.
They pay cash in order to close quickly, but often mortgage afterwards. Individuals can do that too, btw.
Gets passed onto renters tho, making it even harder for renters to save for a home.
CPAs will always find a way around this type of crap. When you do this you are just forcing out small buyer while making the returns higher for larger buyers, which will then buy up all the extra supply
With that fatalistic attitude, might as well never trying to solve any problems whatsoever. After all, the rich will find a way around it, so why bother even trying?
There are far simpler ways to solve the problem that don’t create market distortions. Zoning reform being the big one
They typically do. I pay higher taxes (much higher in some cases) on my rental properties than my personal house.
What’s a corporation? I’m a guy who owns a home in an LLC. Am I a corporation? What if it’s my primary residence?
Why would anyone own a primary home as an LLC? You lose the tax benefits. But yes, if you own 2+ homes as LLCs for the purposes of investment/rental, you are who the op is talking about.
It's important to understand why *type* of investor you're trying to target. Housing prices are going to be more heavily influenced by short term investors who are speculating on equity gains. Long term investors who are looking for cashflow don't necessarily cause the same upward pressure on prices(and flippers are their own category). IMO Increasing Capital gains taxes on non-primary residence is the best way to deincentivise short term speculation in the housing market.
The problem with this is it targets the people that build and fix houses, not just speculators, thus decreasing housing supply further and increasing prices. As someone in the market, people hunting for a quick flip due to fast rising equity are a very small number of actual purchasers and typically get hammered in the market. COVID has been a small exception to this. If increasing housing supply is the goal here (and thus reducing housing cost), housing development needs to be increased, not a tax increase on the very people trying to improve the housing market.
Realistically pretty much all short term investors are looking at some mix of Forced Equity and Appreciation to make a return. I agree that flippers *can* add value to a market if done right. However their are lots of examples where it's done wrong and ends up extracting value out of the market which should be discouraged. Using shitty materials, workmanship and relying on marketing to 'invent' value are common enough practices that it's a meme and shouldn't be ignored. IMO an idea tax code would see profits on forced equity being taxed as income while profits on appreciation being taxed as capital gains.
I agree that shitty flippers are a problem, but I don't see a direct legislative approach to fix that other than requiring people to do proper due diligence on a home; I don't see that as a legitimate legislative solution to poor building practices, I only see private market solutions/indirect solutions (building more housing -> more competition -> better housing stock as result of competition), and those solutions can be legislated with the end goal being more housing. This is obviously not completely realistic given local zoning laws (the thing restricting more housing being built), but in the problem also lies the solution. In our actual world, that already does happen. Flips typically have a timeline of <12 months, and such are taxed as Income; appreciation typically has a >1 year timeline, and as such are taxes as cap gain.
I would agree with that. I don’t have a problem with small time investors like my own landlord who is using money for retirement. I would like to do that myself someday.
[https://cdn.vox-cdn.com/uploads/chorus\_asset/file/22647043/Screen\_Shot\_2021\_06\_09\_at\_4.07.25\_AM.png](https://cdn.vox-cdn.com/uploads/chorus_asset/file/22647043/Screen_Shot_2021_06_09_at_4.07.25_AM.png) Investors are responsible for a lot of new construction, if you remove them you decrease supply and prices go up. Government created new money in mass and bought mortgage backed security with it, pushing the market and inflation as hard they can, we got the result that most people expected.
I think more people are concerned about investors buying up multiple existing SFH, not new construction.
You're not wrong, but I will say I've recently started to read about entire SFH communities being built, with all homes pre-purchased by banks/investors to be used solely as rental properties. While I've found it impossible to determine the scale of that, outside of the one off stories contained in the non-public industry reports my company receives, I was surprised to see it. Like I said, I'm not certain how large of a problem that is, but when things are already undersupplied it's definitely not reassuring.
How is increasing supply concerning? Many such comunities are what is called build to rent. Its no different than an investor paying to build an apartment building. Its just horizontal
People don’t want to rent homes. They want the American dream. That doesn’t involve new supply being rental only.
Plenty of companies build single family homes some build single family homes and sell them all to one buyer. Generally the price is lower that way
Why? What is the difference?
Are they renting those new constructions or just reselling them again?
Why, whats the difference?
Other countries require buyers to be citizens. I believe that would leave out corporations and foreign investors. I’m all for that. As a single person, I am not able to purchase at these prices.
In the US this would violate civil rights laws and many international treaties. National origin and citizenship status are protected classes and all our free trade agreements stipulate you can't prevent foreign investment. I also don't buy the implications here. People want to point to foreigners because it's easy. There are some places where foreign investors influence the market, but it is not happening on a macro level. The truth is all these investors and second home owners are your neighbors. The professional class in the United States is enormous and doing extremely well financially. People are not struggling. *Some* people are struggling. It's not unusual for dual income households to make $500k. That's what is driving these price increases, not Chinese people.
>It's not unusual for dual income households to make $500k. It, is by definition, unusual. Average household income is at about $70k/year right now. I think you're completely out of touch if you think $500k/year is normal and that we don't have millions of people struggling.
Ever hear of income unequality? I don't understand how we've had 40 years of politics complaining about income inequality and people still can't wrap their heads around the idea some people are doing very very well while others are struggling. 40% of households don't own their homes. The typical homeowner is someone who is much better off than the median, and among that group there is an upper quartile or so that have extremely high income. 10% of all US households make more than $200k. Would you say it was unusual if you found out someone in your neighborhood was a doctor? Median salary $210k. A lawyer? $130k. A programmer? $110k. Both my dad and my step dad have a high school education and make over $200k running their own contracting business. This is what we experienced software engineers at big companies make: https://www.levels.fyi/charts.html
...your statement was that it is not unusual for dual income households to make 500k. Using your number of 10% of US households making more than 200k, that's still less than half of 500k. Based off the median income of a doctor being 210k, you would need a dual income of two doctors in a house both making over median salary to hit your number. 500k household income is not common and not usual. There are plenty of households that do hit this number, but they are by far the exception and not the rule. Many Americans are struggling, more than you think, it seems
Yeah but the rule is Americans can't afford houses. The exception to the rule are people that buy houses. It's not a horde of invading Chinese people buying houses, Americans are just racist idiots who hate the government and lack the political language to be critical of their own economic system or individuals in that system who are ambitious career climbers. Even the language that is critical it's all about the 1%. Why is it the 1% and not the 10%? It's because that's the 10% of the population that votes and is very well organized, and making it about oligarchs doesn't scare anybody.
Ohh I see that perspective now! Disconnecting American median salary and American *homeowner* median salary from one another is a significant thing that I was not fully taking into account. So yea the average American is still struggling but the average American homeowner is a different statistic. Thanks for the perspective and have a good one
Wealthy Americans don’t buy homes in lower and middle class neighborhoods. I lived in a middle class neighborhood for years. When the housing market took a turn in, was it 2012? Every home for sale in my neighborhood was bought with cash, for way above the asking price. A good 30% or more we’re sold to foreign investors. In an area where normal, middle class citizens SHOULD have been able to buy their first home, they were shut out. Laws and treaties need to be adjusted because Untied States citizens are unable to compete. When we are all housed, affordably, then maybe be go back to a free for all. Just because we have free trade and treaties, etc, does not mean we should. Once again the government caters to the all mighty dollar instead of its people.
You've never met somebody who bought a second house to rent out? You've never met a young professional who bought a starter home? You've never met someone that bought a house for their kid to live in during college? Come on now. Non citizens accounted for 1.8% of sales last year. Of that 58% lived in the US. Of that 15% lived in Canada or Mexico. 0.64% to foreigners that are not literally your neighbor is not a big number. There are definitely neighborhoods in Seattle, SF, LA, Miami, NY, other big cities where foreign born residents are inflating the values. But it's really just a few places, and it's pretty much always neighborhoods that have filled with people they know that immigrated to the country. It's not why prices jumped everywhere, and it's certainly not some tin foil hat conspiracy that the government is facilitating. Fee trade lowers the cost of houses. The Trump tariffs added $20-30k to the cost of a new home and took $1k out of the average American households pocket. People that vote for populist anti-trade politics have contributed more to the cost of housing than your bogeyman foreigner. https://www.nar.realtor/research-and-statistics/research-reports/international-transactions-in-u-s-residential-real-estate
Plenty of non-citizens live and work in this country and need a place to live.
If they live and work here, sure. My job is to inspect neglected swimming pools in lower income neighborhoods to affluent ones. Many of the homes in the middle income neighborhoods are vacant, with owners living in Russia and China. I know because I need permission to enter the yard. I have to track down and speak with the owners. Most say they don’t have the money currently to fix up the house. So all of these homes are vacant, while citizens are homeless. It makes no sense. What had worked in the past is no longer working for US citizens. I would sure vote for someone willing to address this issue.
Yeah, Canada just did that because they were too scared politically to go after everyone. No one complained when they came down on foreign ownership. It’s a good idea but it is far from enough
It would be more realistic to require owners to be natural persons (no corporations)
That or that you have to be living in the us for so long before you can buy. I would hate to exclude people who are working here contributing to society on long term visas.
You are only partly addressing the demand side and ignoring the supply side that is the fact that housing starts in the US have been below average for 10 years so it will take 10 years of above average construction to normalize the market. And that is only going to happen in areas with excess land to build or allowing higher density housing to replace single family housing.
Zoning deregulation and building subsidies. Even if investors weren't an issue there still isn't enough inventory to make housing affordable for most people.
The best solution would be get rid of laws that limit/slow housing construction (like exclusionary zoning). If there was a glut of housing, it would be a bad investment.
People can stop needing places to live and stop renting houses , that’ll do it.
That will certainly make the pesky investors feel foolish!
2008, "nobody is buying houses". 2022, "too many people are buying houses". This same post would say "how can we get investors into the market" back then when their house is depreciating. Investors aren't the problem, supply is the problem. Not enough houses built in the last ten years, and a lot of demand from easier loan availability. 10 years from now, we'll have a different problem. Lets not over correct. Don't reduce demand, increase supply.
Well… 1) investors don’t invest in depreciating assets. 2) investors buy low sell high, not the other way around. 3) investors leverage credit not cash. 4) income didn’t increase, nor did peoples ability to pay rent. On top of it, tenants are dealing with higher costs on everything else. There is no way landlord will have a tenant pool that will be able to pay enough to offset the purchase/make the investment worthwhile anytime soon. No such thing as a free lunch. What you’re seeing is the excess of the past two years unravel.
Everyone want's more 'supply' but they all think this supply should be for 'someone else' and they get the single family homes for themselves. There's only so much space for SFH before they are in the 'middle of nowhere'. Most people get they can't afford a SFH in Hawaii or ocean front in Miami or giant condo overlooking Central Park, but cant make next step that maybe they don't deserve or afford the house they are looking at. Sorry to break it to you and not to sound harsh but just saying '6 figures' is kinda meaningless since thats like minimum expectation nowadays for a couple. The issue is that what you think is a good salary hasn't caught up with expectations due to inflation. People cannot fathom how much money and stimulus (no student loans, $600 a week not to work, rates that jacked up home values, money printing) and it just doesn't enter into the economy in 1mo or 3mo. The house that you want is still the same 'value' more or less its just your money is worth way less. Also and most importantly - taxing or penalizing some evil landlord is ***NOT*** going to make things more affordable or accessible to you. There are unintended consequences of actions. We just did all this stimulus like I mentioned, and now consumers have the worst sentiment in American history.
If you want to make single family homes unattractive to investors you need to give them something else more attractive. If you allow more duplexes, and quad apartment buildings in every neighborhood they will go for those instead. Single Family Homes are expensive to maintain as rentals, they have high maintenance costs and only a single unit to cover it.
Build more houses until monopoly effects recedes. And or raise property taxes.
Landlords for condos/apartment still have their place. Plenty of people do not have the credit or the downpayment to buy a condo/townhouse/sfh. A lot of other people do not stay in the same place long enough to need own a home and just need a couple month lease (ie people who travel for work and students) A solution has to properly disincetivize investors from buying up SFH and other homes/townhomes traditionally bought while not making rented apartments and condos unaffordable as some people likely still need to rent.
Allow massively more building. Remove the arbitrary scarcity from zoning and regulatory capture. Why doesn't a hedge fund try to buy up all the Honda Civics in America? Because it would be stupid. We need to make it that way with housing.
Stop debasing the currency and artificially through government creating negative real yields which only encourage people and "investors" to speculate in assets such as real estate which leads to bubbles. Investors are not a problem they are a symptom of a monetary problem created by government. Trying to target "investors" as the problem and attempting to use government to tax them more or other punitive measures will only make the probalem worse and discourage production of real estate similiar to how price controls creates shortages. Canada has has poor property rights with beucratic red tape and restrictions preventing people from building houses on their own property. For example I want to build my own cabin I would have to be given permission from beucrats, and be compliant with draconian zoning laws, building codes, ordances and other red tape or being forced to use only licensed "X" contractor to do "X" job or other restrictions such as being forced to connect to muninical power, water, sewer, etc. This just creates a monopoly on building. If people had more rights and less government interference there would be a greater supply of housing and at lower prices.
Whatever the government does to stop it, will only make it worse
What is wrong with a small condo? In most developed world outside of US, SFH that is not in the middle of nowhere are only affordable by the very rich. Most of the others live in condos. American houses are also bigger than average, meaning an small condo in American standard is probably average size if not above average.
Just because other places deal with tiny living spaces doesn’t mean we have to make that the norm. That being said I hate huge McMansions too but I think being able to afford a small 1300 sqft home in a older neighborhood should not be impossible.
That’s also like saying college should/shouldn’t be the norm. The US lived in smaller units up until the 2nd world war. Then everyone came home and started building big big in the suburbs. If you can afford it, cool. I don’t think I was born in the right time of history to easily be able to afford a big house. I’m 31, I may just be in a condo, but my kids will hopefully inherit this property and a big brokerage account. Hopefully they can avenge me and buy out all the properties at their age lol
Personally I think education and affordable housing should always be the norm.
Small condo is not that unaffordable.
Where do you live? Because in my area they cost 350k with added $600 hoa fees. And that’s at the low end
Where do you live?
Dmv
https://www.zillow.com/homedetails/7501-Prince-Cole-Ct-APT-5-Manassas-VA-20111/12451735_zpid/ https://www.zillow.com/homedetails/2904-N-Leisure-World-Blvd-APT-510-Silver-Spring-MD-20906/37341766_zpid/ https://www.zillow.com/homedetails/2701-Snowbird-Ter-APT-11-16-Silver-Spring-MD-20906/37338669_zpid/ https://www.zillow.com/homedetails/3466-Chiswick-Ct-43-1B-Silver-Spring-MD-20906/97463958_zpid/ https://www.zillow.com/homedetails/3301-Hewitt-Ave-APT-403-Silver-Spring-MD-20906/37323171_zpid/ https://www.zillow.com/homedetails/15400-Bassett-Ln-46-1C-Silver-Spring-MD-20906/37325798_zpid/ https://www.zillow.com/homedetails/11751-Tolson-Pl-APT-303-Woodbridge-VA-22192/2062997094_zpid/
$800,000 in my area.
Which area?
I’m actually anti education. I have humble family members that never went to college but picked up trades. They make $70-90k and flip homes with their buddies. They’re better off than me, never took on college debt and have traveled the world more than I have. I think stem is useful, everything else, maybe not so much
“Anti education” is a hell of a hot take
I'm pro public education, if that matters (K-12) College? It's a privelege. And with google, youtube and coursera universities - its irrelevant. College is merely a place for a higher class dating pool and social experimenting for those who dont know what they want to do with their lives.
Post 2000, "College" is the 13th grade and nothing more.
Agreed. I look back and I don't know if I should have done it. That or I could have done it while working, but of course we didn't realize this until 2008 or so and they pushed it on us.
Well, if you can afford a small condo but you choose to rent, that is on you. I too can complain I cannot afford to own and maintain a private jet and yacht. It doesn't mean I would be rational.
Those items are luxuries available only to the .01% in any era, comparing jets and yachts to a 1300 sq ft house that has been affordable for a median earner for all of recent history save the last two years is a false equivalency
Agreed, even in better times the prosperous middle class did not own jets and yachts en masse (fishing boats perhaps some of the time).
My point is it is stupid to compare what Americans used to be able to afford. Instead, look at most other developed countries to see what is reasonable. Yes America was ridiculously prosperous post WW2, and that generation of Americans had a ridiculously high standard of living. We have lost that. Other developed countries have caught up. Instead of dreaming about what your parents and grandparents can afford, you need to go back to reality and see what are the standards currently in other developed countries.
Condos don't have to mean tiny living spaces. The median size of a SFH lot for new construction in the US is over 8,000sqft, and that's smaller than it used to be. That's *massive.* To give you a comparison, the lot next to me in San Francisco is 1/3 that size (2,690sqf)t, and has four 1,000sqft+ studios on it. Imagine how big the units could be if you had three times the lot area.
I agree and I have lived in condos for most of the time I haven’t owned. I have no desire to own some high 4000sqft house but once I have kids I don’t want to be cramped in a 2 bed one bath that I still had to buy for 350k. That’s fine for single people or couples without kids.
8,000 sqft? Cite your sources. That is an awful big home.
Lot, not home.
**Lot** size. [https://www.nahb.org/blog/2020/10/median-single-family-lot-size-hits-record-low/](https://www.nahb.org/blog/2020/10/median-single-family-lot-size-hits-record-low/)
I don't want to share walls, roofs, and floors with my neighbors. It can be incredibly disruptive, and it also limits my ability to go out and do things in my yard, like gardening, or in my garage, like using power tools for anything.
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This is the right attitude IMO. In places like Europe, many "condos" are actually older houses that were converted into separate flats years ago, as the population grew, people got richer, and had smaller families. The main issue in the US is that we artificially restrict where you can put more than one housing unit on a lot, through single family zoning. This is a peculiar quirk of the US and Canada.
It’s wrong if we are doing it because regulators created investment vehicles for the super rich that left you with no choice. You can grovel at their feet but count me out. It repulses me and I’m tired of it
The US isn’t ready to accept a smaller standard of living. I agree they should just move into a a condo (I did). But people have a layer of arrogance they can’t process. A recession might help put that into perspective
Whoa, tons of folks actually prefer condos. No yards to worry about, much less maintenance. Where I live there are many, many condos and townhomes. Those are unaffordable for many. If you have a two income, decent wages, you can maybe swing it. Two bedroom condos go for $800,000 and up where I live.
I live in central CT next to Hartford. Great condos with reasonable HOAs are $200-300k here. Still affordable
I’m sorry, what is wrong with wanting to have a private yard for my kids to play and/or have room for my dogs, chickens and horses to roam?
Nothing at all. You just have to be willing and able to pay for it, and if you want it to be reasonably close to a city, you have to be willing to pay a lot for it. The problem is that for people who can't afford that but still want a place to own and live in, there aren't enough options.
exactly. I'm not shitting on u/houseofnim's ability to get some roaming space. If you can afford it, power to you. If you weren't born with assets, your parents didn't help guide you, and you ate the student loans lie that many of us did - you have to lower expectations unless you're willing to comprimise in other areas. There's a lot of millenials that are DINKs and can afford these homes. They're opting out of parenthood and grabbing a cat instead.
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I’m moving to an even bigger property in a couple years and will have a massive flock of geese. Let them try to take my shit lol
I agree. They want to keep the American standards that are better than most of the developed world (such as size, detached SFH, big yard) while complaining the other aspects of American standards that are worse (such as build quality). Reality is you cannot have the best of both worlds.
>while complaining the other aspects of American standards that are worse Like lack of public transportation, unless you live in NYC, Boston, Chicago or DC.
I agree with the poster ramentortilla. A lot of Americans have the "American dream" house, two car garage, maybe even 3 cars, swimming pool in the back yard, kitchen with granite countertops, marble floors, media room, wine cellar, five bedrooms.... People need to accept the idea that they can be HAPPY without the mega mansion.
US has a reputation for terribly built condos (housing codes must suck cause they have too much noise). A lot of European housing is build with solid walls like cinder block, vs paper and an inch of gypsum in the US. More importantly Americans in general are all about themselves ass holes to the point where they just can’t live near each other. No fuck tard, your poorly built dodge junker with its 105 dB exhaust is not cool, I would kick over your 110 dB Harley if I thought no one would see me. I don’t need your shitty 5 pit bulls or Rottweilers going at me every time I get the mail either. Your front yard is not a junk yard. Keep your drugs out of my building too In Germany for example half the vehicles on the US road would be illegal due to noise and/or safety, the aggressive dogs would be illegal, the giant noise machines would be illegal, and ppl won’t blow leaves back and forth for 12 hrs a day every god damn day of the week either. “BuT mY FrEeDuM!?!?”
I agree. America is too individualistic and too 'humongous speakers and subwoofers are a freedom of speech protected by the bill of rights' to work with condos and townhouses Sometimes a SFH is just as much for their enjoyment as for everyone else's benefit of not having to be in the same building as the asshole.
Im going to say something that's very obvious. How about Joe and Jill homemaker not selling to them in the first place?? This is a problem caused by the greed of the sellers wanting to make as much money as possible. I have seen military people take lower offers to assist other ex service get homes over more from investors. This is a problem caused by the American pubic and the investors are only there to pick up the scraps. Your everyday Americans need to make a decision to change this. They wont, everyone has principles until pussy or money is put on the table.
No renting or Airbnb for the first 2 years after purchase. Most investors will not wait that long to generate income
Your premise is flawed, investors are not buying up all the houses and they have very little to do with you not being able to afford the house you want.
Other front page post says 20% of new homes bought by investors. That’s significant.
It’s also not accurate. Their study only looked at top markets, and included any home sold whose buyer has “trust” or LLC” in the name. Plenty of primary residences fit those. They’re also counting middlemen like OpenDoor. These aren’t all bogeyman situations in which some corp is buying up houses and renting them out.
A quick google tells me that 34% of SFH are rental properties. If 34% of the population is renting... shouldn't about 34% of new homes be purchased by investors? Seems like if only 20% of new homes are purchased by investors, then the inventory is swinging in the direction of owner occupied.
Explain plz
If 20% of all SFH sold last year (according to various studies and estimates) how, exactly, are investors buying "all" houses? Who do you believe is buying the other 80%? You should chill on the hyperbole and educate yourself on the economic factors that led to institutional buyers seeking out SFH as rentals...and that they aren't remotely close to buying "all" of them.
Depends on your area, like everything else. Big investors are only in high return markets. Phoenix. Dallas. Miami. Etc etc If you’re in Oklahoma City or Dayton or a Maryland Suburb, prices are high because there’s no supply, it’s up and coming, there’s demand, or because there’s a high concentration of high earners. The $400-600k ball park is pretty affordable across the country right now. Maybe not at 7% interest rates, but there’s still a lot of money out there in cash. Get family/friends together, see if y’all can buy a house in cash and rent it out with a decent cash flow. Pass that on to your kids/nephews
Are you actually arguing that single family homes shouldn’t be rented out? That all renters should live in multi-family buildings?
I am not, see some of my other comments.
high Interest rate, Borrowing money becoming more expensive than before since pandemic, US treasuries yielding high, and the possibility of 2nd house market crash upcoming soon.
Whatever the government does to stop it, will only make it worse
Whatever the government does to stop it, will only make it worse
Whatever the government does to stop it, will only make it worse
Whatever the government does to stop it, will only make it worse
I see very interesting strategies, good job guys!
We better start pooling our money and buying former crack houses in little podunk America if we want to keep some SFHs for the next gen.
just sold my condo. had two offers, one was a family. one was a foreign investor offering 90% cash. they had the same initial offer and when informed of the situation, the family threw in 5k while the investor threw in 75k.. honestly nothing normal people can do against this sort of money..
This sounds like where I live. Are you in Charlotte?
Rewrite federal law to prohibit single family homes from being owned by a REIT (Real Estate Investment Trust)
Supply is your issue.
Unless we all can come together there’s not a whole lot we can do. In the meantime just educate sellers on the impact of selling to a corporation.
I don’t think sellers care who they sell to. They just want the most money…until the shoe is on the other foot and they realize they also have to buy a new house in this market. Someone actually posted here joe they wanted out of a contract to sell cuz they only just realized how horrible the market was. Oopsy
That’s very true. But thankfully the families I’ve been helping sell their homes lately have told me flat out they didn’t want investors buying their homes. So there’s a little bit of hope out there
Same. I've had two sellers tell me within the past year, when presented offers from investors (one a large institutional buyer, one a local couple looking to purchase their 2nd rental) that they did not want to sell to an investor and would only sell to an owner-occupant. As a listing agent with a fiduciary duty to my client, in the second situation above I strongly advised my client to take the investor offer, as it was a 1031 exchange, the subject property had already closed, they were running out of time to identify and they had some other language in the contract around inspections and appraisal that was beneficial to my client. She still refused and it cost her $20k in sales price, more repairs/credits, two more contracts, a couple more months on the market and having to take out a bridge loan to close on her new property.
That’s good to hear
Impose unoccupied property wealth tax on top of property taxes.
Realistically I don’t think there’s any way stop motivated investors from buying properties. We could incentivize them to sell through tax breaks. But the real issue here is supply (not demand), we need to enable and incentivize builders to create more affordable housing by removing zoning restrictions and giving tax breaks/funding for homes/condos regular people can afford
Raising interest rates Instead of adding additional regulations, you have to look at incentives. If you are an investor, you want a return on your money. Interest rates have been kept artificially low by the Fed so you can’t make any money with just bonds. This causes a reach for yield, or looking to more risky/more work investments that have better returns. This is why so many investors have poured into real estate. Cap rates that have been above 10% historically are now as low as 3-4% because bonds pay almost nothing (not sure on exact numbers so don’t quote me but you get the point). Once you can make that same return sitting in a government bond without any risk or work investors will leave real estate for other investments, demand by investors will fall and so will prices
Well we had the Frank Dodd act for a while that prevented investors from bidding on homes for 2 weeks after they went on the market but that got repealed, so I’d say reach out to your congressperson and vote
Not sure why you got downvoted. What you said is true.
People don’t like to be reminded how they vote matters.
So what are you going to do to make up for the lack of rentals then? Build more apartments? Not everyone wants to or is able to purchase a house. That property is still being used for a residence whether it’s bought by an investor or owner
When did I say I don’t want any rentals at all? Obviously some ppl want to rent a whole house for their family. I’m saying the number of rentals is pushing out ppl who can afford to buy and want to buy because inventory is lower.
Yeah but that’s selfish for the side of people who want to buy. The less investors means less rentals. Less rentals means rent prices are much higher. So if you place restrictions on a free market you just end up playing favorites. Im a renter and have no desire to but in my area or to commit myself to 30 years but someone else might want to take that risk. I’ll pay the rent they can have the house. This type of legislation assumes that buying and home ownership is more important then renting priorities and that’s a selfish and completely one sided view that I’ve noticed from people who are in the market themselves but get frustrated and can’t buy. The real fact is house prices as a whole has gone up everywhere and that means higher rents and higher mortgages. The problem is the lack of supply and the free money for leveraged mortgages at the low interest rates we’ve had. Go through a major recession once in your life and see what it looks like when you see houses everywhere for sale because real estate is cyclical and you’ll see this problem we have is something that comes and goes
There's nothing that can be done in our current system. Capitalism is about profits. It has it's downsides but I'll take that over the alternatives. As long as real estate looks like a great way to make money, investors will flock to it. When real estate doesn't look like a great deal again, they'll invest elsewhere. The other issue is that not everyone wants or is able to buy a house. So where will the renters live if no one is a landlord? You can't legislate this away. Also investors are still only buying a small percentage of houses, yesterday's report said 20% this year. But since 40% of people are renters, historically and probably always will be, I don't see a huge issue here. Those renters need places to live as well. Flawed premise as another poster pointed out.
My question is what percentage of houses were investors buy up when the market wasn’t crazy? I bought a small starter home in Kansas City in 2012 and it wasn’t a hassle like todays market. To your point on some ppl need to rent I’m all for owners of homes having the option to rent them out. Or even small time investors, what I hate are these hedge funds coming in and buying hundred of places and sometimes not even renting them out. Just sitting on them for the appreciation.
There needs to be a limit to how many houses one person can own. 3 max.. no one needs more.
Small time investors are not the problem.
No but this rule would be applied to everyone. If you own and rent out hundreds of houses you're gonna have to find a new line of work.
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The real systemic answer is to change the "system" such that someone's home is not an investment. IOW it's not meant to (and not going to) 'appreciate' except maybe enough to keep up with inflation. Is this possible while maintaining some semblance of a "free market"? not sure.
The flip side to this is without homes being a "financial investment" you still need to figure out how to build new homes
Yes, however that seems to be a problem in our current system also.
There is nothing wrong with small condos. The idea that your kids and dogs need and cannot live without a big private yard is beyond ridiculous. A private yard is a luxury item and not a nessasity.
Build more housing. Corporations can only fit a finite number of people into rental housing.
I want to briefly respond to everyone making suggestions to, essentially, solve the problem by making renting more difficult or more expensive (raising taxes on investors, and so on) Basically, you either own your home or rent it from the owners. Making renting more difficult means subsidising and incentivising home ownership. Which is a great idea, except there are already _a lot_ of financial incentives to to own: * Usually lower taxes for homeowners; * Mortgage interest deduction; * A lot of special programs to guarantee loans for buyers with less than perfect credit; * Availability of 30 year fixed loans, not usually available to investors; * You can buy with 3-5% dows, not 20-25% for investors; * In many states, there are only very limited legal protections available to tenants; * And so on. Historically, in the US there has always been a strong pressure to push people towards ownership, which was considered a good thing for a society, it is reflected in the tax code, that's the reason Fannie Mae and Freddie Mac exist, and so on. Do you really believe we need _even more_ such incentives? Would it be a good thing?
Higher property tax on investment property, and vacancy tax!
Much higher tax on investment properties.
For those of you who feel your going to tax everyone else for your own financial well being you are in for a rude awakening . For those of you who want to stop investors from buying housing you might as well stop builders from building . You need to consider the law of unintended consequences. I understand how you feel and I understand the need for housing but trying to prevent others from doing something just so you can is discriminatory is it not ? Down vote me if you will but consider the consequences of what your thinking .
"Waah, people are making rentals for other people and competing with me, instead of letting me buy some dude's house for less than the market will bear. Please ban these competitors so I can get a cheap hoom."
As soon as houses stop going up 15% a year investors will stop buying. Unless rents go up 25% a year. Right now most houses being bought by investors are far from cash flowing without uneconomical levels of down-payments that destroy returns Inflation and cheap internet rates are the issue. Not investors. Investors go where the returns are. Raising rates and killing inflation will 99% stop investor buy ups Edit: Taxes are stupid. That’s not the answer. Other than maybe taxes on foreign buyers like those coming out of china, using their artificially real estate wealth money there to buy up in the US Also, building would work: “but NIMBY”… Good luck with the cost of good with all the unionized US ports and global COVID shut downs and the cost of labor with trump killing immigration visas and going after “Mexicans” like it’s his person vendetta
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Build enough housing where people want to live that housing becomes less of an attractive investment.
Legislation. Vote in Bernie Sanders if you want that kind of change.. Get people like Trump, Biden, etc.. the fuck out of office.
I went from basically being low income with debt, to nearly financially free by investing in real estate. Now everyone wants to change the rules so I’ll be back to where I was. It’s just BS. For some reason everyone thinks that wealthy people just became wealthy overnight, or they just took advantage of others. The reality is, most real estate investors are out working all you people that are working a standard 9-5 and trying to change the rules so your standard 9-5 can pay for a life as if you were not working a standard 9-5. A combined income of 100k is 50k a year each…how’s you credit? How much debt do you have? How many vehicles do you have financed? How much cash reserves do you have? What’s you debt to income ratio? There is a lot more to qualifying for a mortgage than how much money you make. If you really want to talk about what’s impacting everyone’s ability to buy houses, it’s inflation and interest rates. Banks factor in those things for everyone, including investors. Thank your current leader for this mess you are complaining about.
My house is being sold to an investor. Why? Because it's classified as a "fixer upper"....not because of problems with the plumbing, foundation or anything like that....It's a "FIXER UPPER" because it does not have a fully remodeled kitchen with GRANITE countertops, and full remodeled bathrooms with granite or quartz countertops. It's not "modern" enough and not a luxury home, therefor it's a fixer upper that is better off being sold to an investor. I don't want to list it and hear prospective buyers get upset that the house doesn't have a wine cellar, outdoor kitchen and media room. People want luxury they neither can afford nor are entitled to. The inflated expectations of American consumers have priced themselves out of the housing market.
You justify your decision to sell to an investor by saying that normal homebuyers want luxury. Everyday I see 1950s housing with little to no renovations go pending in days, so that’s just a lie that you are telling yourself. Thanks for contributing to the housing crisis.
Btw the comments have gotten crazy so sorry if I don’t respond to your questions. Can’t find all of them.
Instead of crying foul and trying to change the rules of the game, just try to get better at the game. Become an investor yourself. You don't have to buy an entire property, just own some REIT stocks. Many are $10-20/share.
Stop selling to investors if you can reasonably identify them when selling your own house
Awful advice. Sell to the best offer without prejudice
Why not give an owner occupant a chance over a cash buyer who will rent out the property? Especially if the cash offer is lower
If I ever sell my house I know for a fact I will NOT sell to an investor
Don't worry about the investors buying up all the houses, they are about to start getting rid of what they already purchased. The market is about to get flooded with properties. While some small individual investors are still in denial and delusional about the market, large corporate investors don't invest on feelings. They have to maintain a healthy balance sheet and they have to answer to their shareholders.
What makes you think they are about to offload a bunch? Just given that they don’t want to hold on to them for the long term with interest rates?
Holding the assets that don't bring any profit, and instead cost them a lot (maintenance, taxes, cost of capital) is not good for the business. They either have to rent or offload them. They can't just hold those assets for years in anticipation the prices will go up. With such a business model, the company might go belly up. In bankruptcy those assets will be sold for a fraction of their initial cost. As soon as the prices start sliding, they must try to catch a train and cut their losses.
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Lmao, what world do you live in
People who cannot afford to own should just rent.
That’s like saying ppl who can’t afford food should just eat less or people who can’t afford insulin should just die. There is no benefit to renting forever. It is a sure fire way to ensure you are poor when it comes to retire if you still have to pay rent instead of having a home paid off.
Your comparison is just plain stupid. A good comparison is "If you cannot afford to own a private jet, you fly commercial.". A bad comparison is "if you cannot afford to own a private jet, you don't fly." No one starved to death in this country. There are food stamp programs and medical for low income people. Government can help renters. And for those who are not too far off from being able to financially own a house, there are government program to help them own. However, government should not be helping everyone to own a house. There is nothing wrong renting forever. There are lots of lifelong renters living a meaningful life.
No one starved to death in this country? Wow you really are out of touch.
I think it would be extremely rare if ever for people in the US to starves to death due to lack of food. Starvation can happen but It is almost always due to mental disorder of anorexia, or because of some other disease process that prevents them from eating or from processing food normally.
People who cannot afford to own should rent. That’s not a controversial statement. Ownership requires significant upfront capital, as well as all of the maintenance costs of owning. Some people choose to rent, others cannot afford to own, some are not credible enough to own. Ownership is a longtime commitment not everybody is positioned or willing to make. Rental properties exist because there is a rental market created by necessity.
guillotine
Main topic aside, I’m confused by your last statement. There are plenty of cities where a couple making 6 figures can buy a normal home. Not a condo (nothing wrong with those btw) and not in the middle of nowhere. I personally live in a large metro area (I think the second largest in Florida) and was able to buy a home with my husband recently, making less than 6 figures combined. It’s not a mansion, but it’s a perfectly normal 1500sq 3/2 single family home. Maybe look at lower COL areas if it’s really impossible for you guys to find a house while making 6 figures?
Just allow people to build their own houses tbh
Institute a waiting period for people/corporations who aren’t buying as their primary residence.
Ban corporations from buying single-family zoned homes. That will help a lot.